Just wondering if anyone else would care to comment on the book by David Lereah (NAR chief economist) entitled "Are You Missing the Real Estate Boom?: The Boom Will Not Bust and Why Property Values Will Continue to Climb Through the End of the Decade - And How to Profit From Them". It was published in Feb 2006.

So far the public statements by agents and NAR's various associates haven't been much but a ra-ra of sorts. But I figured that if the chief economist took time out to write an entire book on his position, perhaps he had more to say. I stopped by the book store, thinking I might buy the thing and analyze what he had to say. But I ended up flipping through it and realizing that chapter 2 was his only argument for why there would be no bust, and then chapters 10 and 12 had a little bit more info on the boom relative to vacation homes and such. The rest was a how-to guide for investing in real estate. I decided not to buy the book, and instead stood around for 15 minutes reading through those couple chapters to pick up the key points.

He mentioned "fundamentals" several times, so I fully expected the guy to whip out some data analysis. However, the only numbers I ever really saw were historical interest rates and historical home sales. Of which both types of data really summed up his argument:

- Interest rates are still historically low.- Inventories are still historically low.- Populations are increasing.- Echo boomers are coming of age to buy homes.- Computers and the internet revolutionized home buying, speeding up the process immensely.- Loans are easier to get.- New loans make it easier for people to leverage themselves.

And perhaps a few other points that didn't really make an impression on me. All-in-all, for the NAR's chief economist, the guy I would expect to make the strongest case for no bust, I found his argument non-convincing.

The Florida comments were from an August 2005 interview, and if you listen to the entire interview he does say buying condos in Florida is very speculative. I think you took some liberties with the cut, but it is still funny.

Hessi - That's hilarious I'm still laughing out loud. Did you really make that video? That's really creative, you should send it to David Lereah. I'm still in disbelief the CE of NAR is preaching this book. He must not listen to the news or have seen the latest housing sales numbers. I'm not saying I have a crystal ball and know how much of a correction we're in for. However, I see a trend and it's going down not up. It doesn't take a genius to figure that out.

I bought that book when the title was "Are You Missing the Real Estate BOOM? Why Home Valus and Other Real Estate Investments Will Climb Through the End of the Decade--and How You Can Profit From it!" It was copywrited in 2005. Same book, just retitled.

I have read perhaps 20-25% of the book. Then put it down in disgust. There are some economists who present pretty convincing evidence that most of the time in the USA housing prices go up only at the rate of inflation and changes in the amenities offered by the houses. Thus, houses built in the 1920s, as was mine, have smaller sq footage, fewer bedrooms, fewer bathrooms, no airconditioning, a one-car garage, no insulation in the walls, no dual pane windows, and so on.

Lereah talks about housing prices and their change over time. And he completely ignores the discussion of these economists. And he is supposedly an economist himself. I feel that he must know of these discussions. I find his ignoring this understanding of housing prices as reprehensive behavior on his part. To talk as though houses really increase in value when they usually don't--when adjusted for the lowered purchasing value of the dollar and the amentities offered--that is, in my view dishonest. I wouldn't mind if he put in refutations of these arguments as well as the arguments themselves. But to leave them out completely? Dishonest dude I would say.

So, I stopped reading the book. I cannot trust a single thing that he says when I see him lieing through an omission of this very important issue.

Now, I will say that I think in some places and some times that houses do increase in value more than the inflation rate and the improved amenities. I think this is especially so here in CA.

Whilst it's correct that on average house prices track wage inflation over the long run, there are discernable regional trends which are quite interesting.

For example, prices in California actually have beat inflation over the past 40 years. That's mainly a reflection of population growth and a change in the economy via the growth in hi-tech. In Florida, the advent of air conditioning technology has also seen prices surge ahead of inflation. Of course the losers in the game of averages are the old industrial 'rust belt' (like Detroit) where the hollowing out of manufacturing has seen prices lag inflation.

That being said, the regional differences are a very undramatic percentage or two.

I'd also read that the Dutch street (Herengracht) where a house was traded for a tulip bulb has seen about 0.1% PA appreciation over 350 years (inflation adjusted of course)!! No doubt because, as Ron mentions, it now has more amenities like electricity, central heating and indoor plumbing...

Somehow, I wouldn't expect an economist like Lereah to volunteer such underwhelming historical trends.

"I was disappointed, it was a lot lower than I anticipated," said David Lereah, NAR's chief economist. "What is clear to me is sellers are more stubborn than I expected them to be. We definitely need a correction in prices in order for buyers to come back into the market."

He said he expects home prices to come down 5% nationally, more in some markets, less in others. And a few cities in Florida and California, where home prices soared to nose-bleed heights, could have "hard landings," he said.

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